1. Field of the Invention
The present invention relates generally to data processing in cost/price determination, more particularly to an automated electrical financial business practice or management arrangement utilizing data processing in cost/price determination, and most specifically to such a business practice or management arrangement for the conduct of commodity trading utilizing an auction format in which bidding is conducted online.
2. General Background
Online auctions of various descriptions have recently obtained considerable success consequent the development of the internet infrastructure and its popularization through the world wide web (www) network linking personal and other computers through web sites accessible online, i.e. through the www, which are comprised of software maintained by a server computer and are identified by domain names which constitute the basic www address utilized to access the same.
One such online auction, ostensibly the most widely used and known at present, simply permits the representation of goods to be sold by a private party and the entrance of bids by prospective buyers enabling the seller to select the high bid and arrange for delivery. A fee is charged from the seller upon whom the buyer is dependent for delivery without further involvement by the auction house. This online auction is considered particularly successful because the auction house has severely limited liability and cannot lose money so long as the fee charged exceeds the cost of hosting the seller's data upon its server computer. This system relies upon a grading system which is facilitated by the auction house but conducted by the system users who provide comment upon previous dealings with the seller and in which a new seller has no grade.
This type of online auction is considered appropriate for the trading of collectibles which encompasses a wide variety of goods but which is characterized by the type of good concerned: coins, musical recordings, antique dolls or toys, et cetera. The range is limited to collectibles as necessary to provide the self policing required to deter fraud as the auction house assumes essentially no liability for misrepresentation or non-delivery. This type of auction is not appropriate for commodities which are considered to possess several obvious and fundamental differences with the trading of collectibles: collectibles are discrete items while commodities are not; collectibles are bought to be held and/or sold again while commodities are used as material in the production of finished product; collectibles are sold by the piece while commodities are sold by weight and quality.
These distinctions are considered to distinguish the trading of commodity over the trading of all finished goods inclusive of new product sold over what is ostensibly the second largest known online auction. The difference between a commodity and finished goods, new or previously owned, is considered fundamental and only online auction systems facilitating the trading of commodities are considered to comprise prior art pertinent to the present invention. Prior art relating to online auctioning of financial instruments is similarly excluded by the basic distinction over the same provided by the physical nature of commodity.
References CitedU.S. Pat. #InventorDateTitle4,677,552Sibley, Jr.30 Jun. 1987International Commodity Trade Exchange5,168,446Wiseman1 Dec. 1992System For Conducting And Processing SpotCommodity Transactions5,715,402Popolo3 Feb. 1998Method And System For Matching Sellers And BuyersOf Spot Metals5,835,896Fisher et al.10 Nov. 1998Method And System For Processing And TransmittingElectronic AuctionInformation5,950,178Borgato7 Sep. 1999Data Processing System And Method For FacilitatingElectronic AuctionInformation6,151,589Aggarwal et al.21 Nov. 2000Methods For Performing Large Scale Auctions AndOnline NegotiationsDiscussion of the References Cited
Sibley, Jr. discloses an ‘international commodity exchange’ which combines local trading exchanges located in at least two different countries with a computer network which provides current trading data from a ‘central exchange host’ to the local exchanges and to a number of ‘user computer terminals’ which subscribe to the local exchange but receive information directly from the central host and which may “transmit data representing bids and offers to any other user terminal around the world and through the local exchanges and the host exchange” (Abstract). The local exchanges must facilitate “computerized trades in markets such as the futures markets, cash market, oil market, stock market, and the securities market” (claim 1) but trading in commodities is also disclosed (claims 8 & 9, various drawing figures).
Wiseman discloses a system for trading commodities by subscribers each possessing a ‘trading station’ “electronically coupled to (the) system to form a network” (claim 1), each ‘trading station’ possessing all the means necessary to: display and input data; communicate; transmit a “trading quotation request signal”; decline quotation or transmit “a quotation signal setting forth a bid price and an offer price for the identified commodity, and optionally a volume amount”; receive the quotation; send back a proposal in accordance with the bid or offer terms; receive the proposal; accept a proposal “setting forth a volume amount for the transaction”; and acknowledgement of the acceptance, by alternate parties and with the latter steps or ‘means’ being dependent upon the preceding step or ‘means’.
Popolo discloses a “computerized method of assisting remote users in the process of buying and selling spot metals” (claim 1) which automatically converts “dimensions and asking price data entered by a seller to the preferred units of measure of a prospective buyer”. This requires first “storing preferred units for each user”, sending a data entry form to a seller including commodity type, metal dimension, and asking price, “modifying said form to display a set of attributes uniquely associated with the commodity selected by the seller”, storing this data, and after converting into the preferred units, sending a “non-editable version of said entry form” to the buyer. Entrance of a bid by a buyer to the seller and response by the seller to the buyer via electronic mail is also disclosed.
Fisher et al. disclose “an auction information transmission and processing system implemented as a computer program within said host and network” (claim 1) including a ‘merchandise database’ with information “descriptive of a lot available for purchase by a customer”, a ‘bid database’ with “information descriptive of a bid”, ‘an auction manager’ in communication with the databases, and an associated ‘bid validator’ which receives bids. The auction manager posts a “descriptive merchandise database” and receives bids which are validated and determines whether each bid is successful. The ‘auction manager’ may also use a set time to open a lot to bids and ‘adjust’ the information in the merchandise database by setting a minimum price for a lot.
Borgato discloses a “system for listing and facilitating transactions involving stones categorized by weight and at least one other characteristic relating to the gem” comprising: a ‘host processor’ with a ‘data structure’ for each stone comprised of weight, the characteristic, offer price, and seller ID which arranges the data into a matrix array of categories with automatic comparison yielding the lowest offer price for a category and moving the same into “a primary offer position in the array category”; “a plurality of remote terminals each including a display”; “a data link between said terminals to said host processor” (claim 1); and various means necessary for communication, bidding, and effecting sales whereby the buyer and seller are informed and the stone is removed from the array.
Aggarwal et al. disclose a “method for conducting continuous auctions . . . over a computer network . . . comprising the following steps:”                communicating seller information including an estimated time interval to the next auction decision;        accepting buyer information . . . including a bid price, a bid entry time, a bid duration, and an intended purchase volume; and        dynamically scheduling a next auction through determining a response time . . . said scheduling (being) adjusted in a manner such that buyers are retained in said auction for as lon(g) as (p)possible (claim 1) to which various options are appended and which is essentially repeated in independent claim 17 for a ‘computer program device’ and which is again repeated in independent form in claim 33 including several of the options, i.e. “ascertaining all said buyers for whom said bid price is higher than said asking price” and “adjusting successive estimated time intervals . . . to retain (these) buyers” and “dynamically selecting at least one auction winner” which is further refined and also repeated in independent claim 48 for a “computer program device”, along with repetition of the refinements. A heavy reliance upon the step of “dynamically scheduling a next auction . . . ” is observed as this step alone distinguishes the innovation over the prior art and is also the basis for the more detailed system claimed in four different but essentially repetitive sets of claims.        
In summary, the prior art is seen to disclose various computer data systems intended to facilitate the making of markets and trading of commodities generally, and specifically including steel, gemstones, and bales of cotton. A system which automatically adjusts in order to retain buyers in the auction for as long as possible is disclosed. Use of regular and reverse auctions are disclosed as is the use of an array for organizing information about a commodity including ‘special characteristics’. Use of subscriber, network, and Internet communications systems are disclosed. Provision for electronic transfer of title is disclosed. Provision for negotiation between buyer and seller via counter offers is disclosed. And the volume, price, and locations involved are all utilized as data transferred between parties.
Statement of Need
The prior art does not disclose an auction system providing a choice between auction types nor a choice between at least three types of payment and does not specify terms regarding delivery in association with the terms of payment. While incremental auctioning is considered known the choice of ‘English’ or ‘Dutch’, i.e. upward or downward bidding, together with the choice between incremental or open bidding is unknown. The prior art discloses neither receipt and provision of physical specimens though representation and verification by various means are encompassed. The prior art does not disclose the independent testing of specimens for representation of data and does not disclose use of characteristics appropriate to various commodities, organic and inorganic, and does not encompass multiple sets of characteristics appropriate to a plurality of particular commodities.
The failure of the prior art to provide an online auction system for commodities which is flexible with regard to the commodity addressed, the type of auction, and the construction of terms from several different options inclusive of both delivery and payment, and the failure to provide for authentification of commodity by sample provision or sample testing is considered to present a distinct and poignant need for an online auction system which provides multiple options with regard to: the type of auction; the particular commodity; construction of terms for delivery and payment; verification of product quality by sample provision or testing; and characteristics selectable in description of particular commodities.